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Investor News Wrap: July 2021

Page last updated: 02 August 2021

News from the month that Kiwi investors should know, including new financial regulations, fraud and scams, research, reports and offshore developments.

Investor confidence springs back after COVID

Almost three-quarters of New Zealand investors are confident in the country’s financial markets, according to the FMA’s latest annual Investor Confidence Survey.

Nearly a quarter of those surveyed (23%) said they’d bought new investments or increased their existing investments in the last 12 months.

The survey found a downward trend in those owning term deposits, from 34% in 2019 to 28% in 2021, and a slight uplift in those buying shares, from 17% in 2019 to 21% in 2021. 

MPs to probe cryptocurrencies

Parliament’s finance and expenditure committee is to undertake an inquiry into cryptocurrencies, and is asking for public submissions. 

The inquiry’s terms include understanding the risks of cryptocurrencies to users and the wider economy; the environmental impact of crypto ‘mining’; and their tax implications and use by criminals. MPs will also try to establish if tcryptocurrencies can be regulated, locally or internationally. 

The US Federal Reserve has just published a review of a type of cryptocurrency called ‘stablecoins’, with suggestions on how to address the “systemic risks” they create.

Demand for sustainable investments grows

Investing in sustainable investments grew 15% worldwide in the two years to 2020, according to the latest Global Sustainable Investment Review.

The report said worldwide investing in investments incorporating environmental, social and governance (ESG) concerns reached US$35 trillion in five major markets, and now comprises 36% of all assets under management.

Meanwhile, Deloitte research says investment in dedicated sustainable investing assets –a stricter subset of ESG – will quadruple to an estimated US$13 trillion globally by 2025, driven by retail investor demand, increased disclosure and regulation.

Reserve Bank cuts stimulus, warns of inflation

New Zealand’s central bank has announced it is cutting its current level of economic stimulus in order to meet its objectives around inflation and employment.

The RBNZ said it would halt additional asset purchases, pointing to recent data showing the economy “remains robust despite the ongoing impact from international border restrictions”, with economic activity now above its pre-COVID-19 level.

It warned of inflation “spikes” that would “reflect factors that are either one-off… or expected to be temporary in duration” – but added that “more persistent consumer price inflation pressure is expected to build over time” in the absence of significant economic shocks.

NZ insurers have ‘a lot of work to do’

Insurers offering cover for homes, cars and health have a “poor commitment” to good conduct and culture, according to an FMA review of general insurers.  

Thousands of insurance customers are now due refunds as a result of the review, for activities including double-charging and withholding discounts.

FMA director of banking and insurance Clare Bolingford said New Zealand insurers “have a lot of work to do to get ready for the new [regulatory] environment where we expect the FMA will soon be monitoring and supervising conduct and, in particular, fair treatment of customers.”